Fernholz vs Taibbi

By Felix Salmon

December 11, 2009

Tim Fernholz has an intemperate attack on Matt Taibbi and his latest article, which is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don't like Taibbi, and love it when he gets taken down a peg.
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Tim Fernholz‘s intemperate attack on Matt Taibbi and his latest article is getting a lot of attention in the Twittersphere. It turns out that a lot of journalists don’t like Taibbi, and love it when he gets taken down a peg.

But Fernholz’s attack is weaker than it looks at first glance; a lot of it is simply a matter of slant and opinion. For instance:

“In the end, Frank not only agreed to exempt some 8,000 of the nation’s 8,200 banks from oversight by the castrated-in-advance agency, leaving most consumers unprotected.” The CFPA, while somewhat compromised, remains a strong agency that will protect consumers. In particular, all the banks in the country will be subject to the CFPA’s rules, and they will be able to inspect any bank they identify as problematic. You can also ask Elizabeth Warren, who came up with the idea, what she thinks of Frank’s proposal. Oh, I did.

Actually, Tim, the CFPA is not “a strong agency that will protect consumers”. In fact, it doesn’t even exist. And I clicked through; you didn’t ask Elizabeth Warren what she thinks of exempting 8,000 banks from CFPA oversight. And in any case there’s no doubt that if and when the CFPA does finally become reality, it will be smaller and weaker than when it was first proposed, especially now that it can’t mandate that banks offer plain-vanilla products. As Taibbi writes:

Frank’s last-minute reversal — made in consultation with Geithner — was such a transparent giveaway to the banks that even an economics writer for Reuters, hardly a far-left source, called it “the beginning of the end of meaningful regulatory reform.”

Um, thanks for making me sound respectable?

In any case, I feel that Fernholz is a bit like Heidi Moore: he’s missed the point of Taibbi’s polemical style. Taibbi is not interested in an writing an even-handed examination of Obama’s economic policies: he’s interested in writing an enjoyable screed which jumps off the page and which describes Alan Greenspan as “a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters”. This stuff isn’t meant to be taken nearly as literally as Fernholz is taking it — but in any case, Fernholz’s game of gotcha comes up with precious little of real substance. Viz:

Michael Froman. His connection to Obama is through their time together on the Harvard Law Review, not through Rubin. He did indeed once work for Rubin, and was a member of Obama’s transition advisory board; he was not on the transition staff. His portfolio is international economic policy, he does not participate in domestic financial policymaking except in that strategic role; of late his main focus has been managing economic negotiations with China.

But here’s how Taibbi actually describes Froman:

Leading the search for the president’s new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama’s biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin…

Joining Summers, Furman and Farrell at the NEC is Froman, who by then had been formally appointed to a unique position: He is not only Obama’s international finance adviser at the National Economic Council, he simultaneously serves as deputy national security adviser at the National Security Council. The twin posts give Froman a direct line to the president, putting him in a position to coordinate Obama’s international economic policy during a crisis.

Taibbi is quite explicit that Froman and Obama met at Harvard Law, and indeed claims that Froman introduced Obama to Rubin, not that Rubin introduced Obama to Froman. Taibbi says that Froman “went to work for” the Obama transition team; I think that’s probably true, even if Froman wasn’t on the formal transition staff. Taibbi also says that Froman’s role is that of international finance adviser; he never says that it’s domestic financial policymaking.

In other words, it’s worth cross-checking everything that Fernholz says against what Taibbi actually writes, because often Taibbi simply doesn’t say what Fernholz implies that he says.

All the schadenfreude over Fernholz’s attack on Taibbi is particularly weird since they seem to actually agree with each other. Here’s how Fernholz concludes:

Is it disconcerting that employees of the financial industry make a ton of money? Yes. Is it the revolving door between Washington and Wall Street problematic? Yes. Does the Administration take it too easy on the banks? Absolutely. Are White House advisers too centrist for progressive tastes? Sure. But when you try and tell that story with a lot of lies and innuendo, and misunderstand the basic policies that these people are producing, you don’t hurt them. Now anyone who criticizes the Administration will just be lumped in with Taibbi’s meandering conspiracy…

Doing the work is hard. But if you want to make a dent, you have to do it.

This is quite astonishing. Fernholz is basically saying that Taibbi is right, and that not only is he right but that he will now and henceforth utterly overshadow anyone else who’s criticizing the Obama administration from the left. At the same time, however, despite Taibbi’s astonishing ability to encapsulate and personify the entire group of people who criticize the administration, he’s not even going to manage to “make a dent”, because he’s not going about his job in an evenhanded J-school manner.

Personally, I love it that Taibbi exists, and I’m impressed that his 6,500-word screed (into which a great deal of work clearly went) in fact has very little in the way of factual errors, let alone “lies”. Yes, Taibbi is polemical and one-sided, and he exaggerates his thesis, and he’s entertaining; I daresay he’s learned a lot from watching Fox News. And no, I would never want to live in a world where everybody wrote like that. But Taibbi is one of a kind, and we can enjoy him and learn from him as such. He might not end up changing policy in Washington. But he’s doing a much better job of making the policy debate relevant to Rolling Stone‘s readership than anything Tim Fernholz has ever done.